Bitcoin’s current trading price is hovering just under $71,800, reflecting a rise of approximately 2.9% over the past month. Recent analyses have unveiled a bullish pattern within Bitcoin’s (BTC) daily chart, indicating a possible breakout target of 11%. However, the underlying data presents a more cautious outlook.
Despite the recent price increase, Bitcoin’s open interest—essentially the total number of outstanding derivative contracts—has seen a decline. Spot outflows have reduced significantly, halving compared to previous levels, and overall investor confidence in long positions is markedly lower than in earlier months. While the structural formation appears promising, the lack of momentum and trading enthusiasm raises concerns.
On the daily chart, Bitcoin’s price has traced a rounded bottom pattern, characterized by a gently upward-sloping neckline. This design emerged following a gradual recovery from the lows experienced in late March. Following a peak on April 9, the market entered a consolidation phase that may align with the handle of the pattern if current trends persist.
Yet, indications of market momentum tell a more aggressive story. The Relative Strength Index (RSI), a crucial indicator of buying and selling pressure, is currently at 58.44. Notably, between March 4 and April 9, the price printed a lower high while the RSI recorded a higher high, creating a hidden bearish divergence. This divergence could signal a continuation of the downtrend.
Despite the month-to-month gains, Bitcoin remains down 17% year-to-date. Traders are cautious, as the recent pullback suggests that the consolidation phase may have additional movements before a potential breakout occurs. Even though the structural formation is positive, its future trajectory will largely depend on both the derivatives and spot markets.
Comparing the market conditions from April 8 to the present sheds light on a marked decline in trader conviction. On April 8, as Bitcoin approached $72,300, the total open interest was at $27.39 billion, with a funding rate of 0.007%, indicating strong bullish sentiment. In contrast, today, with Bitcoin priced similarly, open interest has dropped to $27.04 billion, and funding has tumbled to just 0.002%. This indicates a significant reduction in aggressive long positions.
The situation on the spot market also raises alarms. Data from Glassnode shows that exchange net position changes, which track the inflow and outflow of Bitcoin on exchanges, peaked at a negative 80,352 BTC on March 26. Currently, that figure has decreased to negative 36,221 BTC as of April 9, representing a nearly 50% drop. During a recent rally that increased Bitcoin from $67,860 to $71,303, exchange outflows were notably strong. However, as prices approach similar levels now, the urgency among spot buyers is lacking.
Despite these mixed signals, the daily Bitcoin chart with Fibonacci levels indicates a critical zone for pattern resolution. Price predictions suggest that the key range appears between $73,151 to $73,240, where the rounded bottom’s neckline and the 0.618 Fibonacci retracement intersect. A decisive daily close above $73,240 would validate the breakout, projecting a targeted price move of approximately 11%, bringing the target price close to $81,720.
However, with open interest diminishing, funding rates stagnating, and halved exchange outflows, there is a notable risk associated with the current bullish structure. Should Bitcoin fail to reclaim the $73,151 level, it may face a more profound pullback, with the RSI divergence still in play. The initial support level stands at $70,065, while a deeper decline beneath that could threaten the integrity of the bullish structure, with critical support lying at $64,920.
If Bitcoin can secure a daily close above $73,240, it may activate the target of $81,720, aligning the price with its structural and momentum indicators. Conversely, a rejection at this level could result in BTC trading in a range, lacking clear direction in the presence of diminished leverage and conviction from traders.
